Intellectual property legal risks hidden in OEM processing contracts
Company A is the holder of a well-known brand of washing machines in China, and Company B is a small and micro enterprise specializing in the production of washing machines in a certain place. . Company B has won a contract to produce a specific model of household washing machine for Company A, and its normal profit is expected to be between 500,000 yuan and 700,000 yuan in three months. In the "Cooperation Agreement", in addition to normal business terms, the two parties also made the following agreement on the patent matters involved: "Party B guarantees that the products it produces will not infringe the patents or other intellectual property rights of third parties. If related products are subject to If a third party makes accusations, all disputes will be handled solely by Party A, and Party B shall unconditionally bear all legal consequences related to this and all losses suffered by Party A.”
After that, Company A will sell the product. , was sued to court by a third party, Company A, for patent infringement. In order to maintain its market image, Company A quickly reached a mediation agreement with Company A under the auspices of the court and paid Company A a one-time compensation of 800,000 yuan. It then notified Party B and required Company B to bear all losses of approximately 900,000 yuan in accordance with the contract. Ten thousand yuan. After Company B obtained the information on the case, it found through analysis that the relevant products did not actually fall within the scope of Company A’s patent protection. After negotiation, Company B actually paid 600,000 yuan to settle the matter.
Lawyer’s statement
Most OEM processing contracts have comprehensive properties such as processing contract, purchase and sale contract, technology development or cooperation contract, and their contents are often intertwined with each other and are relatively professional. powerful. Under normal circumstances, the client will often provide a contract that has been prepared in advance. This type of internal structure is quite stable and must contain detailed agreements on intellectual property-related issues. Therefore, it is difficult for non-experts to find the problem. In addition, processing enterprises are at a disadvantage in the negotiation process of cooperation in OEM processing operations. They often only focus on the game of business terms such as price, delivery time and method, and product quality. When negotiations on the aforementioned terms are often frustrated, It is easier to ignore or dare not review the intellectual property-related clauses proposed by the client, laying the groundwork for possible risks in subsequent cooperation.
This is also the case in this case. Party B cooperated with a well-known brand merchant for the first time and finally got the order, so he only filled in the price and other contents agreed upon by both parties in the blank space of the contract provided by the client and signed and stamped it. After being accused by Company A, Party B stipulated in the contract that its losses would be borne by Party B. Party A chose to mediate and settle the lawsuit without justifying the relevant accusations, which is also a natural result of the choice to maximize interests.
In fact, if Party B proposes during the negotiation that if the product is accused of intellectual property infringement by a third party, the accused party should immediately notify the other party and work together to actively handle it. Then Party B will at least be aware of the matter, and thus have the opportunity to participate in the dispute resolution, and take appropriate countermeasures such as invalidation and non-infringement defense to safeguard the interests of both parties to the maximum extent, instead of being almost helpless like this case.
In fact, in the subsequent cooperation, due to the intervention of professional lawyers, when Party B proposed modifications to the above terms, Party A accepted them without any objection. While OEM processing companies pay attention to business content such as price, they should also pay attention to communication and negotiation on procedural matters for dispute resolution, and strive for their right to know, vote, and handle, etc. to participate in dispute resolution, so as to maximize their initiative.
From experience, a large number of OEM processing companies face intellectual property legal issues, in addition to patents, there are also brand, copyright, trade secrets, etc. infringement and contract disputes, and the review should also be strengthened. and communicate. In short, although OEM processing companies objectively have low visibility, weak R&D capabilities, fierce competition, and thin market profits, which puts them in a weak position during negotiations, their awareness of legal risk prevention cannot be reduced because of this. Of course, the intervention of professionals is also an important guarantee for protecting the legitimate rights and interests of OEM processing enterprises.